Tax Plan & Health Care Implications

December 6, 2017

Overview

The House and Senate tax bills give huge tax cuts to corporations and the wealthy at the expense of low- and middle-income families. The tax bill would raise taxes on 19.4 million households with incomes below $200,000, while 53.7 million households would see no tax cuts. This would result in about 40% of households with incomes below $200,000 either seeing no meaningful tax cut or actually getting a tax increase. According to theJoint Committee and the Congressional Budget Office (CBO), people making between $40,000 and $50,000 would see a tax hike of $5.3 billion by 2027, while those earning over $1 million would get a $5.8 billion tax cut.

The Center on Budget and Policy Priorities estimates that by 2027, millionaires would see their incomes rise by an average 1.7 percent ($48,000), while those making between $30,000 and $40,000 would see their incomes rise by only 0.6 percent ($267). The other big winner would be corporations, which would see the corporate tax rate lowered from 35% to 20%. This would not benefit low-to-moderate income workers as history shows that when corporations get tax relief, they reward executives and shareholders, but do not pay higher wages, which in the US have been stagnant since the 1970s, despite record profits. This would contribute $1.5 trillion dollars to budget deficits over 10 years.

Additionally, the bill would repeal the individual mandate, the requirement that people maintain health coverage or pay a penalty. This could lead to a 10% rise in health insurance premiums in 2019 and an estimated 13 million fewer people having health insurance by 2025, according to the CBO. Middle class families would bear the brunt of these increased premiums. According to the Center for American Progress, the average middle-class family will see a premium increase, for individual market insurance, of nearly $2,000. The CBO analysis also revealed that the House version of the bill would result in hundreds of billions of dollars in cuts to Medicare, starting with $25 billion in cuts in fiscal year 2018. Medicaid could also be cut by more than 20% – $1 trillion dollars – over the next 10 years. TheAARP also reported that premiums for 64-year-olds could increase by an average $1,490, rising to $16,420 a year.